To BuyChoosing A
Agent Time to
The Initial Agreement and Deposit
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums and to convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
Escrow Agent An escrow company/agent is decided upon during negotiations. What is escrow? Escrow is the process whereby parties to the transfer or financing of real estate deposit documents, funds, or other things of value with a neutral and disinterested third party (the escrow agent), which are held in trust until a specific event or condition takes place according to specific, mutual written instructions from the parties. Escrow is essentially a clearinghouse for the receipt, exchange, and distribution of the items needed to transfer or finance real estate. When the event occurs or the condition is satisfied, a distribution or transfer takes place. When all of the elements necessary to consummate the real estate transaction have occurred, the escrow is “closed”. http://www.dre.ca.gov/files/pdf/Escrow_Info_Consumers.pdf
How to Hold Title You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Inspections Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. termite, roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
- Each milestone is successfully reviewed and the contingencies are removed, bringing you one step closer to the close or…
- After reviewing the property and the reports, you may choose to request a renegotiation of the terms of contract or requests the seller to make repairs of items identified on the reports.
Appraisal and Lending
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Association Approval If the property that you are purchasing is conditional upon an association approval, escrow will request the rules, regulations, and other important documents from the HOA as soon as you have an effective agreement to purchase. Make sure that the processing fees are submitted to escrow by the required time. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most lenders require a certificate of approval before closing.
Property Insurance If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance.
Gas, Electricity & Water
Remember to contact the local services a week before closing and schedule to have services transferred into your name on the day of closing. We can provide you with the service company in your area. San Diego Gas & Electric or SDG&E provides Gas & Electricity for San Diego County